China flexes its financial muscles

By Huang Tien-lin 黃天麟

Beijing’s plan to use economic means to promote unification is not some sort of secret conspiracy; it is rather an open secret. This is because Beijing has made the point clear.

However, Taiwan is filled with “courageous Taiwanese” who do not see things this way and are rather obsessed with glorious ideals, like making Taiwan into some sort of Asia-Pacific regional hub and big talk of “moving boldly into China,” for example.

After a decade of this thinking, Taiwan’s economy has ended up in really bad shape and this is why we have seen things like the Directorate-General of Budget, Accounting and Statistics revising down the country’s economic growth rate forecasts eight times in a row, while posting negative figures for both exports and private investments.

It is now plain as day how economically marginalized Taiwan has become.

Beijing’s grand plan of using economic means to promote unification has entered a new phase, because the first phase of this plan — to marginalize Taiwan’s economy has already been completed — and China has successfully attracted as much as US$500 billion, or approximately NT$15 trillion, in Taiwanese production funds.

In the meantime, it is also sucking up Taiwan’s technological and labor base in the process. Taiwan is in a very unhealthy state at the moment and is incapable of continuing to increase investments in China.

China, on the other hand, is very strong and is no longer reliant on Taiwan’s intermediate raw materials and component parts.

As a result, the focus of China’s goal of promoting unification through economic means will change from its previous emphasis. Previously, China sought to entice Taiwanese businesspeople to invest in China. Now, as part of the second phase of China’s marginalization of the Taiwanese economy, the focus is on using Taiwanese businesspeople to help China earn huge sums of foreign exchange while helping Chinese investors buy up businesses.

Although the Taiwanese government has referred to these deals as simply being “investment protection agreements,” Taiwanese people need to be clear that it is promotion which is the true value at the core of these agreements. That is exactly what Beijing needs at this point in time.

It is therefore little wonder that in the days after these agreements were proposed, pro-China media outlets spoke on Beijing’s behalf using rhetoric such as “Taiwan and China have now entered the age of bidirectional investment.”

It is not only pro-China media outlets that are obeying Beijing’s wishes. The Cabinet also could not wait to talk about how it would carry out a fourth tranche of considerations on opening up to further Chinese investments in Taiwan.

They have begun to discuss relaxing restrictions on Chinese investments in Taiwan and reviving the economy, citing these as great reasons to open up Taiwan to Chinese investment.

As far as Beijing is concerned, now is without a doubt the best time for Chinese investors to get into Taiwan and acquire Taiwanese businesses.

With Taiwan so marginalized and with the stock market in such a shambles, as soon as the Taiwanese government loosens restrictions, China will easily be able to take control of Taiwan’s major businesses and even use Taiwanese businesspeople in China to indirectly control strategically important industries so as to meet their unification goals.